In-service withdrawal

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In-service withdrawal

A participant-initiated withdrawal from an employer-sponsored retirement plan while the participant is still employed by the company.

In-Service Withdrawal

A withdrawal from a retirement plan made before a certain event occurs, such as an age threshold or departure from a job. Typically, an in-service withdrawal results in a penalty for the account holder. For example, if one makes a withdrawal from a 401(k) before the age of 59 1/2, one must pay an excise tax on the withdrawal. These penalties exist to discourage in-service withdrawals.